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Ed Yardeni of Deutche Bank Alex Brown shows the SP500 as still about 10% overvalued as of end of July. It has dropped about 4% since then so that would be about 6% overvalued as of now.
(See attached GIF from www.yardeni.com/public/val.pdf)
Part of his is Sunday morning message is appended below.
Bob Fulks
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Sunday morning, August 19, 2001
<snip>
In our StrategyFax #672, Debbie Johnson and I observed that the 12-month sum
of layoff announcements, as compiled monthly by Challenger, rose to 1.3
million in July, the highest reading since 1992. Many of the job losers are
skilled and knowledgeable employees with relatively high-paying jobs. They
are probably receiving some severance pay. This might explain why
unemployment insurance claims have remained surprisingly subdued. In the Old
Economy, laid-off workers went back to work for the same company in the same
job once business improved. In the New Economy, layoffs are permanent, so
companies are delaying cutting payrolls as long as they can. This is one
reason why the profits and tech/capital spending recessions are so severe.
But if profits don't improve soon, layoffs could mount at a faster clip,
wage gains could be diminished, and year-end bonuses might be very
disappointing.
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